Topic 4

Question 1

When is capital games tax payable

Answer 1

Capital gains tax is payable on a gain made on disposal of certain assets

Question 2

What is disposal

Answer 2

Disposal-the sale or transferring of ownership or transferring of ownership given away receiving compensation for its loss or destruction

Question 3

What are examples where capital gains tax Is due

Answer 3

Personal property worth more than a certain amount
Real estate or land that is not main home
Sale of shares outside Isa
Disposal of business assets such as land or registered trademarks

Question 4

When is capital games tax payable

Answer 4

Capital gains tax is payable on net gains in the tax year after deducting any allowable capital losses that were made in the same year or carried forward from previous years

Question 5

What is the annual capital gains tax allowance known as

Answer 5

Annual exempt amount

Question 6

What can an individual do if they make a loss on the disposal of an asset

Answer 6

They can normally be offset against gains made elsewhere on disposal of assets

Question 7

Can A capital loss be carried back to to a previous year

Answer 7

No

Question 8

How is capital gains tax calculated

Answer 8

The costs of purchase and sale can be deducted thereby reducing the size of the gain

Costs of improvements to the asset can be treated as part of the purchase price

Question 9

When is capital gains tax normally payable

Answer 9

Capital to gains tax is normally payable on the 31st of January following the end of the tax year the gain is realised

Question 10

What is private residents relief

Answer 10

This is applicable for someone selling a property that they have lived in as their main or only residence

Question 11

If someone has more than one property and shares time between each what can they do in regards the capital of gains tax

Answer 11

They are able to nominate one property that will be eligible for private residents relief

Question 12

What is business asset disposal relief

Answer 12

Capital gains tax is payable when business owners sell trading businesses they may be able to pay a lower rate of tax on gains on qualifying assets if they meet certain conditions this is commonly known as business asset disposal relief

Question 13

What is the criteria need to be able to claim business asset disposal relief

Answer 13

The individual must generally own at least 5% of the ordinary share capital allowing them to exercise at least 5% of the voting rights they must also be entitled to 5% of distributed profits

Question 14

What is roll over relief?

Answer 14

Roll over relief can be claimed if the assets disposed of are replaced by other business assets. So capital gains tax is differed until a final disposal is made.

The replacement must be bought within a period of 1 year prior or 3 years after the disposal of the original asset

Question 15

What is hold over relief

Answer 15

Capital gains tax rising from the gift of certain assets can normally be deferred until the recipient disposes of them

Question 16

What is the nil rate band

Answer 16

The amount on which a nil rate of inherent tax applies so the amount is liable for tax but the rate is 0%

Question 17

Can the Nil rate band allowance be transferred

Answer 17

Each individual has their own nil rate band allowance which can be transferred to surviving spouses and civil partners by the proportion of the unused nil rate band allowance from the earlier death of the spouse

Question 18

What is inheritance tax due on

Answer 18

Inheritance tax includes the total estate on death and the value of any money or assets that have been given away 7 years prior to death the tax due on the money or assets given way prior to death is taxed on a sliding scale these are PET’s potential potentially exempt transfers

Question 19

What is residence Nil rate band

Answer 19

If part of the estate left includes a residence that is being left to a direct descendant then an additional resident’s nil rate band can be applied

Question 20

Can residents nil rape band be carried forward

Answer 20

As with Neil rate band if any residential nil rate band is unused in full or in part on death the unused balance can be carried forward for use upon the death of a surviving spouse or civil partner

Question 21

At what point is residential new rate band value decreased

Answer 21

Where the total value of estate less liabilities exceeds 2 million pound the value of residential value of residential nil rate band is reduced by one pound for every 2 pound in excess

Question 22

What does 0 rated vat mean

Answer 22

This means vat is still payable on these goods and services however the current rate of vat is 0%

Question 23

Are all businesses and self employed persons required to register for VAT

Answer 23

No businesses and self employed persons are only required to register for vat if their annual turnover is above a certain figure.

Anyone below that figure can choose to vat register but are not obliged to

Question 24

What is an advantage of registering for VAT

Answer 24

An advantage of registering for vat is vat paid on business expenses can be reclaimed

Question 25

What are 2 disadvantages of registering for vat

Answer 25

One goods or services are more expensive due to having to charge vat
Too admin involved in collecting and paying the 80

Question 26

Who pays corporation tax

Answer 26

Corporation tax is paid by limited companies on their profits it is also payable by clubs societies and associations by trader associations house in associations and cooperatives

Question 27

Who does not pay corporation tax

Answer 27

Corporation tax is not paid by either conventional business partnerships or limited liability partnerships or by self employed individuals these are subject to income tax

Question 28

Companies resident in the uk corporation tax

Answer 28

Companies resident in the UK pay corporation tax on their worldwide profits whereas companies resident elsewhere only pay corporation tax on UK profit